Pāmu Announces Half-year Result

Pāmu (Landcorp Farming Limited) produced a Net Operating Profit (NOP), (its preferred financial measure), of $15 million for the half-year to 31 December 2022 compared to a loss of $1 million in the comparable half-year. This is a pleasing result given Pāmu operated with four fewer farms than in the prior period.

Although NOP for the half year compares favourably to the prior year result, the Net Profit After Tax (NPAT) of $4 million compares unfavourably to $41 million from the prior half year. This was because the prior year’s livestock revaluation gains of $50 million decreased to a $1 million loss in the current year. This non-cash, fair value loss reflects the prevailing weaker market prices for livestock, principally sheep and dairy animals.

Pāmu CEO Mark Leslie said the result was a sign of the times.

“As a food and fibre business, and state-owned enterprise, staying profitable while also playing a role in showing what is possible is a priority.

“There are many challenges facing the primary sector and Pāmu is making headway by trialling solutions to the likes of dairy-beef integration, climate adaption, and land use diversification. Incorporating forestry into parts of the farming landscape is a case-in-point with downstream benefits to freshwater, erosion control, animal welfare, carbon sequestration, as well as future timber income. Unfortunately, inflationary pressures have added to the costs of these initiatives,” Mr Leslie said.

“While the tight labour market has eased slightly and we are seeing turnover slow, we continue to monitor the situation closely,” Mr Leslie said.

“Geo-political uncertainty and inflationary pressures are hanging over export markets. There are some signs that red meat prices could improve as the Chinese economy recovers out of COVID-19 lockdowns and Middle East demand for protein continues to grow,” he said.

“The impact of Cyclone Gabrielle on forecasts is still to be determined but North Island flooding and the subsequent cost of clean-up will likely affect our ability to meet full-year financial targets. The most severe impact is to 22 of our livestock farms which have suffered damage to infrastructure and pasture; this will limit the ability for them to hold projected stock numbers and have a material consequence.

“I’d like to acknowledge the fantastic way our team has responded to this adverse event, looking out for each other and their communities in what is proving to be very challenging times. I’d like to wrap up by thanking those who work hard every day to make Pāmu a company of which New Zealanders can be proud,” Mr Leslie said.

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